Number of Americans Lacking Health Insurance on Rise

Despite the success employers have had in holding down health costs in recent years, 7 million more Americans, bringing the total to 46 million, will be without health insurance by 2002, the American Hospital Assn. reported Tuesday.

The percentage of those without health insurance, now 15.1%, will climb to 16.2% over the six years, according to the report, which was prepared for the AHA by Lewin Group, a health research firm.

“We must not ignore the increasing number of our neighbors who, through no fault of their own, are losing their health insurance,” said AHA President Dick Davidson. “Working Americans should not have to exhaust their life savings or rely on charity for their basic health needs.”

The rising numbers are attributable in part to shifts in the economy. The service sector, where firms are less likely to offer health insurance, is growing rapidly, while manufacturing is shrinking. Traditionally, manufacturing and other union-dominated industries provide health insurance coverage.

In addition, many companies are turning over part of their work to outside contractors, who often do not provide coverage for workers. And firms are reducing or eliminating coverage for workers who take early retirement, the AHA said.

“Unless the private sector and government together find a way to get health coverage to all Americans, our efforts to improve the health of communities and contain health care costs will fail,” Davidson said.

Federal law allows workers to continue to keep their health coverage after they quit or are laid off. However, a worker must pay the company’s share of the insurance premium as well as his own, and an additional 2% charge for administrative costs.

The newly unemployed worker often finds it hard to make the payments. The average monthly premium last year, in situations when workers paid the full cost after leaving the job, was $177 a month for individuals and $464 a month for families.

About three-quarters of workers let their coverage lapse when they leave a company, according to the study.

The economy is “putting downward pressure on employers that provide health benefits and downward pressure on family incomes,” said E. Richard Brown, director of the UCLA Center for Health Policy Research.

Employers are looking for ways to control their costs, and this could mean seeking a better deal when they buy insurance, keeping insurance coverage but making workers pay more or dropping coverage entirely, he said.

The proportion of U.S. workers and their family members covered by health insurance through work peaked at 77% in 1990 and has dropped steadily since, reaching 73.9% last year. As erosion continues, coverage through work will fall to 70.4% by 2002, the AHA study predicted.

The big gaps in coverage occur among lower-paid workers. In California, two-thirds of the uninsured are in families with incomes below $15,000 a year, according to UCLA studies.

The state, with its large low-income population and its plethora of small businesses, lags in coverage compared to the nation as a whole.

California had 64% of workers and family members covered by health insurance. The figures were 57% for Los Angeles County and 64% in Orange County, according to UCLA. Los Angeles has a large population of “working poor” and major industries, such as clothing manufacturing, where coverage is scarce, Brown noted.

The health law just passed by Congress and signed by President Clinton guarantees access to coverage when a person goes to a new company, even if the worker has a preexisting medical condition. It also guarantees that individuals cannot be rejected for insurance when they leave a corporation and seek to buy an individual policy.

The trend of declining coverage is disturbing because it means that more people will lack protection against the rising cost of medical services, the AHA report said.

For those who are covered at work, the biggest change has been a major increase in their share of health care expenses.

Individuals and families are paying higher deductibles--the amount paid before the insurance kicks in--and more of the total premiums.

The average contribution for family coverage in a health maintenance organization rose to $131 a month last year, an increase of $10 a month over the previous year, the AHA report said.